The holding company has a term of around $ 1.2 billion through March 2022.
S & P Global Ratings has revised the outlook for Vedanta Resources from “negative” to “stable” as the commodity conglomerate strengthens its ability to meet its debt obligations over the next 12 to 18 months through an improved capital structure.
Vedanta Resources has announced an open offer to acquire an additional 10% stake in its 55% subsidiary Vedanta Ltd.Analysts expect this to strengthen the holding company’s corporate structure and improve access to cash and cash flow at the subsidiary level.
The acquisition, which is expected to be completed by March 2021, should also have a positive impact on the company’s refinancing initiatives, according to the rating agency. “We value the free cash flow at Vedanta Ltd (including Hindustan zinc Ltd) will be between $ 1.6 billion and $ 1.8 billion in the twelve months ended March 31, 2022, ”said the agency’s analysts. Based on the reserve price, Vedanta Resources will borrow an additional $ 800 million to fund the acquisition of the 10% stake in Vedanta Ltd.
The holding company has a term of around USD 1.2 billion through March 2022. In December 2020, Vedanta Resources repaid approximately $ 485 million of its $ 670 million bond due in June 2021. The next major commitment is the $ 1 billion bond due in July 2022. The company is believed to rely on dividend payments and intercompany loans to pay off its debts. In the first quarter of fiscal year 21, Cairn India took out loans of around USD 300 million. Vedanta Resources has a term of approximately $ 2.5 billion in FY23 and approximately $ 3.2 billion in FY24, including repayment of intercompany loans of approximately $ 750 million over the two years.
Vedanta Resources’ failure to privatize Vedanta Ltd had raised concerns about the company’s ability to sustainably service its debt over the next 12 months. S&P Global announced in October 2020 that it would downgrade the company if it is unable to reduce refinancing risk by improving access to finance and servicing its debt in a sustainable manner.
In the first half of fiscal year 20, Vedanta Ltd raised approximately $ 1.3 billion in new debt by increasing its 14.82% stake in cash-rich and profitable 64.9% subsidiary Hindustan Zinc Ltd. which was delisted from the London Stock Exchange in October 2018 to Anil Agarwal, founder and chairman of Vedanta Resources, and his family are the major shareholders of Volcan.
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